Following the better performance reported for the first half of 1999, trading in the second half further improved over that of 1998.

Increased sales were achieved in most of the 50 countries in which Delcam is now represented. Total sales for the year were at record levels of £15,774,254 compared with £13,735,249 in 1998 contributing to a record profit before tax of £1,042,075 compared with a loss of £1,418,549 in 1998. Earnings per share were 13.5p compared with a loss per share of 23.7p in 1998.

The improved sales enabled us to continue our level of investment in product and market development. At the same time improved cash generation and strict cash control have enabled us to improve the net cash position by £1,605,917 during the year. Our new building extension has been fully occupied, and a re-valuation has resulted in a surplus of £2,267,473.

As a result of the improved profitability, the Board proposes to pay a final dividend of 1.8p per Ordinary Share (1998 – nil) which, combined with the interim dividend of 0.7p, makes a total of 2.5p for the year per Ordinary Share (1998 – nil). This is covered 5.4 times by profits for the financial year. The final dividend will be paid on 12^th May to shareholders on the register at the close of business on 14^th April 2000.

The shares are expected to be quoted ex-dividend on 10 April 2000.

This is an excellent performance with a return to profitability and the dividend list. This is largely due to the rapid and positive acceptance of our new Power Solution range of software and a strong recovery in the Far East.

We have extended greatly the functionality within both of our key products – our design software PowerSHAPE and our manufacturing system PowerMILL. These developments have enabled us to broaden the markets for both products, with PowerSHAPE now more suited to product design as well as tooling design and PowerMILL offering a much wider range of machining options. We have also embraced new distribution technology, with evaluation copies of PowerSHAPE being widely distributed using Internet, as well as traditional, distribution methods.

Sales of our engraving and woodworking software, ArtCAM, continued strongly. This program has been made available to every secondary school in the UK, as part of the CADCAM in Schools Initiative being undertaken by the Department for Education and Employment.

We have worked closely with a number of equipment manufacturers to enable our software to be provided within a total customer solution and the Company has successfully negotiated a number of collaborative agreements. ArtCAM is supplied by a number of manufacturers of machine tools. In 1999, an agreement was signed with Romer for our inspection software, PowerINSPECT, to be supplied with the company’s measuring arms. This year, a development agreement has been signed with the leading metrology company, Renishaw, which will enable the supply of our reverse engineering software to many of its customers.

Our Internet site has grown increasingly popular and provides a significant source of enquiries for our products. During this year, it is planned to offer some low-cost products for sale via the Internet and to launch a web-based CAD data translation service.

We made excellent progress in 1999 and the improved revenues have allowed us to increase the resources we can devote to the development and marketing of new products leading to a strengthened product line with further releases planned in 2000. This, together with our global presence and strong international sales and support infrastructure, provides a platform for a future of sustained growth. The current year has started satisfactorily and is in line with expectations.